Ker-ching! Councils cash in as revenue soars from licensing schemes

The implementation and costs of landlord licensing schemes in Britain are a lottery.

That’s the conclusion of a new analysis of licensing charges between local authorities conducted by Direct Line for Business.

It shows a large variance with the cost of a new licence ranging from just £55 to £1,150.

In Liverpool the cost of a licence for a first property is £412, whereas in Salford just 30 miles away it is over 51 per cent higher at £625. The average landlord licence across the UK costs £591.

In Scotland and Wales landlord licence schemes are mandatory while in England just one in six local authorities have a scheme in place – this adds up to an estimated 460,000 rental properties in England.

The research has also identified a dramatic increase in the costs charged by local authorities for landlord licences over recent years.

For its additional licensing scheme, the cost of a licence in Newham, east London, increased by 150 per cent in just three years, from £500 in 2014/15 to £1,250 in 2017/18.

Local authorities are raising huge sums from additional landlord licensing schemes, with Liverpool council receiving over £4m in a year covering over 42,000 properties. On average, each council with a scheme in place raised £144,629 from landlord licensing schemes in 2017.

Direct Line for Business claims there are a baffling range of licence costs, terms and exceptions depending on the local authority running the scheme.

These include tiering the cost of licences based on the number of rooms in a property (12 per cent), charging by property type (nine per cent) and the number of occupants (eight per cent).

Meanwhile local authorities across the UK recorded an average 5,069 licensing offences in 2017, an increase of 46 per cent since 2016. Civil penalties are notionally up to £30,000; however, the average fine for a licensing offence in 2017 was just £926.

“Our analysis shows landlord licensing is truly a postcode lottery, with a phenomenal range of costs for those that do have to sign up for a scheme. Anyone planning on becoming a landlord, or who already has a property portfolio, should contact their local authority to see if they have a scheme in place” says Matt Boatwright, head of Direct Line for Business.

In Wales all landlords are required to register with the centrally-administered Rent Smart Wales and to either be licenced themselves or use a licenced agent.

The Direct Line for Business analysis reveals that since the start of 2017, there have been a total of 11,392 successful landlord licence registrations and Rent Smart Wales has generated over £1.54m in revenue in that timeframe.

Since the start of 2017, there have also been 1,625 licences granted to agents, those who let or manage a rental property in Wales. These registrations generated £211,321 in revenue.

Finally in Scotland – where it is a criminal offence to let a property without registering with a local council – there have since the start of 2017 been over 22,000 new landlords registered and over 46,000 successful renewals.

Everyone carrying out letting agency work also must apply to join the Scottish Letting Agent Register.

Responding to the research, the Residential Landlords Association’s policy director David Smith says: “Whatever the cost of licensing, it fails to provide any assurance about the quality of accommodation. The RLA’s own analysis shows that there is no clear link between a council having a licensing scheme in place and levels of enforcement against criminal landlords.

“The fundamental problem with all schemes is that it is only the good landlords who come forward to be licensed. They completely fail to identify the crooks. They just mean landlords, and therefore tenants, having to pay more.

“Instead, councils need to be more creative in how they identify landlords by better using the powers they have to collect data using council tax returns and accessing information from deposit schemes.”